Medicaid “Block Grants” would be Devastating to People Living with HIV and Hepatitis

By Dori Molozanov January 30, 2020

The Administration released guidance this week that allows states to request capped “block grant” funding for their Medicaid programs, a drastic deviation from Medicaid’s long history as an entitlement program providing affordable, comprehensive coverage for millions of low-income individuals and families. This radical change to the structure of the Medicaid program will be devastating to people living with HIV and hepatitis and would curb or even reverse the progress and momentum behind plans to end the HIV and hepatitis epidemics.

The guidance establishes guidelines for states that wish to seek federal “1115 waiver” approval to cap funding per beneficiary in return for greater flexibility to limit benefits. A block grant would lead to cuts in access to services with negative consequences for vulnerable populations, including people living with or at risk for HIV and hepatitis, who depend on Medicaid coverage in order to receive the care they need. Several states have already taken initial steps to implement block grants in their Medicaid programs, and the new block grant guidelines will likely give a green light for other states to pursue block grants as well.

As an open-ended entitlement program, Medicaid has historically been available to anyone who meets the eligibility requirements. States are guaranteed federal financial support to run their programs, regardless of the number of people who enroll. Under a block grant structure, states would instead receive a fixed amount of federal Medicaid funding. States would need to pay any costs exceeding their federal grant using state funds.

The point of a block grant is to cut state costs by making painful cuts to benefits and shifting Medicaid costs to patients and providers. For instance, states could control costs by limiting eligibility, capping or freezing enrollment, covering fewer services (including prescription drugs), lowering provider payments, or increasing cost sharing for patients.

Any of these options for containing costs under a block grant structure would harm people living with and at risk for HIV or hepatitis, and would have detrimental individual and public health outcomes. As the largest public health insurance program in the U.S., the Medicaid program is a critical source of coverage for people living with and at risk for HIV and hepatitis. Medicaid accounts for 30% of all federal spending on HIV care and is the second largest source of public financing for HIV care in the U.S. (behind Medicare). It provides coverage to an estimated 42 percent of adults living with HIV, making it the largest source of insurance coverage for people living with HIV. Medicaid coverage of people living with HIV has increased significantly nationwide, driven largely by gains in states that expanded Medicaid to millions of low-income childless adults—the population most at risk of losing benefits or coverage under a block grant structure. Additionally, the hepatitis C disease burden among Medicaid beneficiaries is particularly high compared with the general population and is estimated at 7.5 times that of commercially insured populations.

Although the proposal requires states seeking block grants to cover PrEP and drugs used to treat HIV, mental health conditions, and opioid use disorder, these limited protections do not go far enough in ensuring that people living with HIV or hepatitis have adequate access to care and treatment. The guidance explicitly invites states to reduce the scope of benefits covered under the Medicaid program, which could result in reduced access to services such as case management and non-emergency medical transportation that help people living with HIV, hepatitis, and comorbid conditions access care and manage their conditions. States that choose to cut back on benefits could also limit access to hepatitis treatments by adopting a closed formulary or increasing cost sharing and utilization management techniques such as prior authorization and step therapy.

People living with or at risk of HIV or hepatitis also risk losing their Medicaid coverage altogether. For many, losing Medicaid means losing access to life-saving prevention, care, and treatment, often without any alternative options for comprehensive, affordable coverage. The guidance encourages states to impose burdensome premiums and cost-sharing requirements, despite the overwhelming body of evidence showing that even nominal monthly contributions are a proven barrier to care for low-income individuals and can decrease participation in health care programs. The guidance also encourages states to impose additional conditions of eligibility, such as work requirements. In doing so, the administration ignores evidence that Medicaid work requirements lead to significant coverage losses, and disregards federal court decisions finding that work requirements are illegal because they do not further the objectives of the Medicaid program. Even though the guidance prohibits states from disenrolling people living with HIV or mental health conditions for failure to pay premiums and cost-sharing, enrollees living with other conditions such as hepatitis are not protected from losing coverage if they fail to comply with burdensome requirements.

Capping Medicaid funding would also make the program less responsive to emerging public health threats and other changing needs—for example, if costs rise due to an economic downturn, disease outbreak, or discovery of new medical treatments. For example, in states at risk of an HIV or hepatitis outbreak because of the opioid epidemic, similar to the HIV outbreak experienced by Indiana in 2015, the state would bear costs for care and treatment (with the exception of drugs used to treat HIV or opioid use disorder) once they exceed the cap amount. States would also be limited in their abilities to respond to new health innovations—such as, for example, the advent of curative hepatitis C treatments.

Block grants in Medicaid would significantly undermine the Administration’s ambitious Ending the HIV Epidemic initiative, which leverages public health infrastructure and scientific and technological advances to scale up HIV prevention and treatment. Safety net programs such as community health centers and the Ryan White HIV/AIDS Program, while critical for ending the HIV and hepatitis epidemics, must operate alongside robust public programs such as Medicaid that provide widespread access to affordable, comprehensive coverage.

For additional questions, please contact Dori Molozanov.